“While going in for a SIP, choose dates during the fag end of the month or very early during the month. This can help you get units at lower NAVs”
The Systematic Investment Plan (SIP) route is often suggested as the best way for retail investors to invest in equity funds. This is because it cuts the element of 'timing' by allowing investors to accumulate units systematically over a period of time.
ET Investor's Guide suggests an even better investment strategy - while going in for the SIP route, choose dates during the fag end of the month or very early during the month. If history is any indication, this method can help investors get units at lower let asset values (NAVs).
In the last six out of seven years, Sensex values, on an average, have been lower during the 23rd of a month to the 2nd of the next month. The situation was no different when a similar study was performed across equity funds.
Normally, there are 3-4 possible entry dates (mostly 1st, 7th, and 10th, 15th, 20th or 25th of a month) that an investor can choose from, to invest in any mutual fund for SIP requirements. Depending on the NAV as of the investment date, the investor is allotted units to his credit. By following the above investment strategy, investors are expected to generate maximum returns over the long term. On an average, investors will get units at a lower NAV than otherwise.
There is a clear trend in the way NAVs of the equity market and equity funds behave during the end of a month, as opposed to their behaviour during the middle of the month.
ET Investor's Guide suggests an even better investment strategy - while going in for the SIP route, choose dates during the fag end of the month or very early during the month. If history is any indication, this method can help investors get units at lower let asset values (NAVs).
In the last six out of seven years, Sensex values, on an average, have been lower during the 23rd of a month to the 2nd of the next month. The situation was no different when a similar study was performed across equity funds.
Normally, there are 3-4 possible entry dates (mostly 1st, 7th, and 10th, 15th, 20th or 25th of a month) that an investor can choose from, to invest in any mutual fund for SIP requirements. Depending on the NAV as of the investment date, the investor is allotted units to his credit. By following the above investment strategy, investors are expected to generate maximum returns over the long term. On an average, investors will get units at a lower NAV than otherwise.
There is a clear trend in the way NAVs of the equity market and equity funds behave during the end of a month, as opposed to their behaviour during the middle of the month.
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